The EU Succeeds in Establishing a Permanent Investment Court in its Trade Treaties with Canada and Vietnam

The European Commission has recently successfully negotiated a new trade pact with Canada (referred to as the Comprehensive Economic and Trade Agreement or ‘CETA’) and one with Vietnam (the ‘EU-Vietnam FTA’) which incorporate, among other things, a new method for the resolution of disputes between foreign investors and the states which host their investments.

In this client briefing, we explain how:

the EU-Vietnam FTA and CETA provide a number of important substantive protections for qualifying investors;

qualifying investors can enforce these protections through a direct claim against the state hosting its investment;

such a claim will be heard by a new court and appellate body (rather than through international arbitration in the traditional sense of that term);

decisions rendered under the treaties will be recognizable and enforceable within the jurisdictions of the contracting states (i.e., the member states of the EU, Vietnam and Canada), but may run into difficulties elsewhere; and

any foreign investors which are concerned by the new dispute resolution regime or want broader substantive protection than that which is on offer under the EU-Vietnam FTA or CETA can structure or restructure an investment so that it passes through a non-EU jurisdiction which has a bilateral or multilateral investment treaty with the country hosting the investment.